Petrol, diesel price rise pause after a week of increase

Petrol and diesel price rise went on pause on Tuesday much to the relief of consumers faced with unprecedented increase in auto fuel prices for the past one month that has taken retail rates to record high levels across the country.

Accordingly, in the national capital, petrol continues to be sold at Rs 104.44 per litre and diesel at Rs 93.17 per litre, the same levels as Monday.

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In India's financial capital, Mumbai, where petrol became costlier by 29 paise per litre on Monday, its retail rate remained static at Rs 110.41 on Tuesday, the highest across all the four metro cities. Diesel also costs Rs 101.03 for one litre in Mumbai.

The price pause on Tuesday has come after fuel prices rose consistently for the past seven days taking the rates to all-time high levels. The prices of petrol and diesel remained steady on October 4, but saw a hike after that.

Diesel prices have increased on 15 out of the last 18 days before Tuesday's pause taking up its retail price by Rs 4.55 per litre in Delhi. The prices of diesel has increased between 20-30 paisa per litre so far, but since Wednesday it has been increasing by 35 paise per litre.

With diesel price rising sharply, the fuel is now available at over Rs 100 a litre in several parts of the country. This dubious distinction was earlier available to petrol that had crossed Rs 100 a litre-mark across the country a few months earlier.

Petrol prices had maintained stability since September 5, but oil companies finally raised the pump prices last week. Petrol prices have also risen on 12 of the previous 14 days taking up its pump price by Rs 3.25 per litre.

OMCs had preferred to maintain their watch prices on global oil situation before making any revision in prices. This is the reason why petrol prices were not revised for the last three weeks. But extreme volatility in global oil price movement has now pushed OMCs to effect the increase.

Crude price has been on a surge rising over three year high level of over $ 83.5 a barrel now. Since September 5, when both petrol and diesel prices were revised, the price of petrol and diesel in the international market is higher by around $9-10 per barrel as compared to average prices during August.

Under the pricing formula adopted by oil companies, rates of petrol and diesel are to be reviewed and revised by them on a daily basis. The new prices become effective from 6 a.m.

The daily review and revision of prices is based on the average price of benchmark fuel in the international market in the preceding 15-days, and foreign exchange rates.

But, the fluctuations in global oil prices have prevented OMCs to follow this formula in totality and revisions are now being made with longer gaps. This has also prevented companies from increasing fuel prices whenever there is a mismatch between globally arrived and pump price of fuel.